PERTH (miningweekly.com) – The Western Australian state government on Tuesday announced a royalty rebate for magnetite miners, which would allow for a rebate of up to 50% for the first 12 months of magnetite production.

The rebate would be considered on a project-by-project basis, Premier Colin Barnett said.

“Western Australia has vast magnetite resources and this ore is preferred by many Chinese steel mills.

“This industry has the potential to stimulate new investment and construction activity throughout the state. However, bringing magnetite ore to grades suitable for export is capital and energy intensive, so this royalty rebate will assist in recovering the massive investment required to achieve production,” he noted.

Barnett said this meant that a rebate of up to 50% of royalties paid would apply for the first 12 months of magnetite production, before returning to the full royalty rate of 5%.

The policy will apply for a three-year period from now.

The Association of Mining and Exploration Companies (Amec) has welcomed the move.

“Amec has been working closely with the Western Australian government over the past two years in order to develop realistic industry-wide royalty concessions that would foster development and growth of the emerging magnetite industry throughout the state,” CEO Simon Bennison said on Tuesday.

“Although the proposed royalty rebate will apply on a case-by-case basis, it is a very positive initiative that will be welcomed by magnetite producers, particularly noting the high upfront capital costs in establishing a magnetite mine.”

Bennison said the complex and high processing costs of magnetite beneficiation have also been recognised by this decision.

“Despite the fact that the rebate will only apply for the first year, before returning to the full royalty rate of 5%, it will provide magnetite miners welcome financial and cash flow relief and allow companies to develop their business.

“The payback to the government will be significant, through the flow-on effects of job creation and associated economic benefits,” said Bennison.